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Commentary: LCDs poised for the big time

Gartner believes that 15-inch flat-panel displays could go as low as $399 before prices stabilize in the second half of 2001 as demand for PCs picks up.

By Mostafa Maarouf, Gartner Analyst

Gartner believes that 15-inch flat-panel displays could go as low as $399 before prices stabilize (or even increase) in the second half of 2001 as demand for PCs--especially for notebooks--picks up.

Notebooks and ultraportables are the primary market for LCDs, and growth in the notebook market has had a strong influence on the price of LCDs (liquid crystal displays) in other applications. LCDs constitute a significant portion of the cost of a notebook or desktop PC.

LCD price drops are undoubtedly springing from excess manufacturing capacity, combined with a much weaker than anticipated 2001 demand for notebook PCs. The price of LCD monitors will generally fluctuate to absorb the excess capacity as manufacturers produce fewer notebooks (thereby reducing the demand for LCDs) in anticipation of weaker demand for PCs.

See news story:
Flat-panel prices keep sliding
Some buyers may decide to upgrade their PC systems with the purchase of a new LCD monitor. Hence, PC makers have an incentive--in addition to getting rid of excess inventory, which is the main factor at play here--to slash prices on LCD monitors to try to generate sales of the system as well. After all, LCDs have a higher profit margin than the overall system.

3. If the commentary The key benefits of LCD technology are lower power consumption, sleeker design and space savings. However, given a $150 to $200 price premium for LCDs over the equivalent CRT (cathode ray tube) monitor, most buyers are indifferent to LCDs. If the premium drops below that range, LCD technology will become compelling for most consumers, and Gartner expects that mass adoption will follow. If the premium remains higher than that, adoption will go more slowly.

If 15-inch LCDs reach a price point of $399 or lower in 2001, LCD monitors should achieve significant penetration among consumers and businesses.

(For related commentary on using LCD technology instead of CRT technology, see registration required.)

Entire contents, Copyright ? 2001 Gartner Group, Inc. All rights reserved. The information contained herein represents Gartner's initial commentary and analysis and has been obtained from sources believed to be reliable. Positions taken are subject to change as more information becomes available and further analysis is undertaken. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of the information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof.